Bill S2895-2013

Establishes the interstate insurance product regulation compact to regulate certain insurance products among member states

Establishes the "Interstate insurance product regulation compact" to regulate certain insurance products among member states and to promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products.

Memo

BILL NUMBER:S2895

TITLE OF BILL: An act to amend the insurance law, in relation to establishing the interstate insurance product regulation compact to regulate certain insurance products and providing for the repeal of such provisions upon expiration thereof

PURPOSE: Establishes an interstate insurance product regulation compact. The purposes of this compact are, through means of joint and cooperative action among the compacting states:

a. to promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products;

b. to develop uniform standards for insurance products covered under the compact;

c. to establish a central clearinghouse to receive and provide prompt review of insurance products covered under the compact and, in certain cases, advertisements related thereto, submitted by insurers authorized to do business in one or more compacting states;

e. to improve coordination of regulatory resources and expertise among state insurance departments regarding the setting of uniform standards and review of insurance products covered under the compact;

f. to create the interstate insurance product regulation commission; and

g. to perform such other related functions as may be consistent with the state regulation of the business of insurance.

Section 2 adds a new Article 88 to the Insurance Law entitled the "Interstate Insurance Product Regulation Compact" (hereinafter referred to as the "Compact") This Article consists of seventeen new bill sections: Sections 8801-8817.

The bill creates an Interstate Insurance Product Approval Commission (hereinafter referred to as the "Commission") and provides the statutory framework for states to enter into an interstate insurance product regulation compact.

The Compact would establish a single point of filing for certain insurance products and rate filings which would be subject to uniform national standards Those states that are members of the Compact would

develop the uniform standards that apply to products filed with the Commission Product standards would be developed through a rulemaking process which would require the approval of two-thirds of the commission management committee and two-thirds of the commission members. Unless a state opts-out as described below, approval of a product by the Compact would be the same as approval by a member state. The bill would, however, allow companies the option to continue to file products in the individual states through the existing form filing processes.

The bill also provides that individual states will continue to regulate market activities and allows for coordination among states and the Commission to determine instances of violations of uniform standards subject to the final order of the Commission.

If a state disagrees with a product standard developed by the Commission, it may opt-out of the uniform standard either by regulation or legislation For long-term care insurance, states may opt-out at the time of the joining the Compact ("front-end" opt-out) In order to opt-out by regulation (a state must show that the uniform standard does not provide reasonable protections to the citizens of the state and that the needs of the state outweigh the Legislature's intent to participate in and receive the benefits of the Compact.

The Compact would become effective when two states enact compact legislation. The Commission becomes operational (that is adopting uniform standards, receiving products and giving approvals/disapprovals) if twenty-six states or states representing forty percent of the premium for life (disability income insurance and long-term care join the Compact.

Operations of the Commission would be financed initially through contributions and other Sources of funding and over time through the filing fees paid by insurers.

All donations, grants of money, equipment, supplies, materials or services, purchases, gifts, donations, conveyances, mortgages, pledges, leases and exchanges, received by or on behalf of the Commission will be limited to the direct funding of the lawful and authorized operations of the Commission.

In addition, the Commission is solely responsible for its liabilities unless otherwise specifically provided in the Compact. However, in no event shall the obligations of the Commission be the debt of the State of New York nor shall any revenues or property of the State of New York be liable therefor.

All states joining the Compact would be involved in setting up and overseeing the activities of the Compact, including developing product standards and the rules and operating procedures of the Commission.

The Commission would make an annual report to the legislature and governor of each state joining the Compact In addition to opting out of

particular product standards, each state has the right to withdraw from the Compact, by enacting a statute repealing this bill.

Section 3 of the bill provides for a January 1, 2014 effective date, with an expiration date of December 31, 2016

JUSTIFICATION: In general, interstate compacts are used to establish the framework for cooperative solutions to multi-state challenges. There are over two hundred interstate compacts currently in existence covering a wide variety of subjects Every state belongs to at least fourteen such compacts This bill is based on the NAIC Model Act.

The bill provides for a single point of product and rate filings subject to uniform national standards, which provides the following benefits:

a. Regulatory efficiency/effectiveness: more effective use of limited regulatory resources.

b. Single high-quality review of increasingly complex products

c. Leverage collective expertise of states in setting uniform standards

d. opportunity to redirect resources to other areas of consumer protection.

e. Meet industry's need for single point of filing.

f Meet industry's need to get products to market in a more timely manner.

g. Permit industry to compete more effectively with financial institutions such as banks and security firms.

h. Provide consumers with a broader choice of products in a more timely manner.

States would still retain control over the insurance regulatory process even if a state elects to join the compact If a state disagrees with a product standard developed by the Commission, it may opt-out of the uniform standard either by regulation or legislation The bill would also allow companies to continue to file products in the individual states through the existing form filing process.

FISCAL IMPLICATIONS: Establishment of a Commission would be of minimal cost to New York State. The Commission would be funded by the insurance companies who are utilizing the services of the Commission

EFFECTIVE DATE: The act shall take effect January 1, 2014 and shall expire and be deemed repealed December 31, 2016 provided, however, that

any policy or contract issued during the period that the law is in effect that has been approved in accordance with this law shall continue in full force and effect.

Text

STATE OF NEW YORK
________________________________________________________________________
2895
2013-2014 Regular Sessions
IN SENATE
January 24, 2013
___________

Introduced by Sen. SEWARD -- read twice and ordered printed, and when
printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to establishing the
interstate insurance product regulation compact to regulate certain
insurance products and providing for the repeal of such provisions
upon expiration thereof
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Legislative findings and intent. An interstate compact is
an agreement between states that permits states to cooperate on multi-
state or national issues while retaining state control. There are over
two hundred interstate compacts currently in existence and every state
belongs to at least fourteen such compacts. The interstate insurance
product regulation compact is designed to streamline state product regu-
lation systems to allow insurers to more quickly market certain types of
insurance products nationally and to reduce the number of variations of
the same product that a company must produce to meet specific product
standards. The compact would cover individual and group products for
life insurance, annuities, disability income and long-term care insur-
ance. The state of New York seeks to join with other states and estab-
lish the interstate insurance product regulation compact and become a
member of the interstate insurance product regulation commission.
S 2. The insurance law is amended by adding a new article 88 to read
as follows:
ARTICLE 88
INTERSTATE INSURANCE PRODUCT REGULATION COMPACT
SECTION 8801. SHORT TITLE.
8802. PURPOSE.
8803. DEFINITIONS.

EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01801-01-3

S. 2895 2

8804. ESTABLISHMENT OF THE COMMISSION AND VENUE.
8805. POWERS OF THE COMMISSION.
8806. ORGANIZATION OF THE COMMISSION.
8807. MEETINGS AND ACTS OF THE COMMISSION.
8808. RULES AND OPERATING PROCEDURES; RULE MAKING FUNCTIONS OF
THE COMMISSION AND OPTING OUT OF UNIFORM STANDARDS.
8809. COMMISSION RECORDS AND ENFORCEMENT.
8810. DISPUTE RESOLUTION.
8811. PRODUCT FILING AND APPROVAL.
8812. REVIEW OF COMMISSION DECISIONS REGARDING FILINGS.
8813. FINANCE.
8814. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT.
8815. WITHDRAWAL, DEFAULT AND TERMINATION.
8816. SEVERABILITY AND CONSTRUCTION.
8817. BINDING EFFECT OF COMPACT AND OTHER LAWS.
S 8801. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "INTERSTATE INSURANCE PRODUCT REGULATION COMPACT".
S 8802. PURPOSE. THE PURPOSES OF THIS COMPACT ARE, THROUGH MEANS OF
JOINT AND COOPERATIVE ACTION AMONG THE COMPACTING STATES:
(A) TO PROMOTE AND PROTECT THE INTEREST OF CONSUMERS OF INDIVIDUAL AND
GROUP ANNUITY, LIFE INSURANCE, DISABILITY INCOME AND LONG-TERM CARE
INSURANCE PRODUCTS;
(B) TO DEVELOP UNIFORM STANDARDS FOR INSURANCE PRODUCTS COVERED UNDER
THE COMPACT;
(C) TO ESTABLISH A CENTRAL CLEARINGHOUSE TO RECEIVE AND PROVIDE PROMPT
REVIEW OF INSURANCE PRODUCTS COVERED UNDER THE COMPACT AND, IN CERTAIN
CASES, ADVERTISEMENTS RELATED THERETO, SUBMITTED BY INSURERS AUTHORIZED
TO DO BUSINESS IN ONE OR MORE COMPACTING STATES;
(D) TO GIVE APPROPRIATE REGULATORY APPROVAL TO THOSE PRODUCT FILINGS
AND ADVERTISEMENTS SATISFYING THE APPLICABLE UNIFORM STANDARD;
(E) TO IMPROVE COORDINATION OF REGULATORY RESOURCES AND EXPERTISE
BETWEEN STATE INSURANCE DEPARTMENTS REGARDING THE SETTING OF UNIFORM
STANDARDS AND REVIEW OF INSURANCE PRODUCTS COVERED UNDER THE COMPACT;
(F) TO CREATE THE INTERSTATE INSURANCE PRODUCT REGULATION COMMISSION;
AND
(G) TO PERFORM SUCH OTHER RELATED FUNCTIONS AS MAY BE CONSISTENT WITH
THE STATE REGULATION OF THE BUSINESS OF INSURANCE.
S 8803. DEFINITIONS. AS USED IN THIS ARTICLE:
(A) "ADVERTISEMENT" MEANS ANY MATERIAL DESIGNED TO CREATE PUBLIC
INTEREST IN A PRODUCT, OR INDUCE THE PUBLIC TO PURCHASE, INCREASE, MODI-
FY, REINSTATE, BORROW ON, SURRENDER, REPLACE OR RETAIN A POLICY, AS MORE
SPECIFICALLY DEFINED IN THE RULES AND OPERATING PROCEDURES OF THE
COMMISSION.
(B) "BY-LAWS" MEAN THOSE BY-LAWS ESTABLISHED BY THE COMMISSION FOR ITS
GOVERNANCE OR FOR DIRECTING OR CONTROLLING THE COMMISSION'S ACTIONS OR
CONDUCT.
(C) "COMPACTING STATE" MEANS ANY STATE WHICH HAS ENACTED THIS COMPACT
LEGISLATION AND WHICH HAS NOT WITHDRAWN OR BEEN TERMINATED PURSUANT TO
SECTION EIGHT THOUSAND EIGHT HUNDRED FIFTEEN OF THIS ARTICLE.
(D) "COMMISSION" MEANS THE "INTERSTATE INSURANCE PRODUCT REGULATION
COMMISSION" ESTABLISHED BY THE COMPACT.
(E) "COMMISSIONER" MEANS THE CHIEF INSURANCE REGULATORY OFFICIAL OF A
STATE INCLUDING, BUT NOT LIMITED TO COMMISSIONER, SUPERINTENDENT, DIREC-
TOR OR ADMINISTRATOR.

S. 2895 3

(F) "DOMICILIARY STATE" MEANS THE STATE IN WHICH AN INSURER IS INCOR-
PORATED OR ORGANIZED OR, IN THE CASE OF AN ALIEN INSURER, ITS STATE OF
ENTRY.
(G) "INSURER" MEANS ANY ENTITY LICENSED BY A STATE TO ISSUE CONTRACTS
OF INSURANCE FOR ANY OF THE LINES OF INSURANCE COVERED BY THIS ARTICLE.
(H) "MEMBER" MEANS THE PERSON, OR HIS OR HER DESIGNEE, CHOSEN BY A
COMPACTING STATE FOR SERVICE ON THE COMMISSION.
(I) "NON-COMPACTING STATE" MEANS ANY STATE WHICH IS NOT AT THE TIME A
COMPACTING STATE.
(J) "OPERATING PROCEDURES" MEAN PROCEDURES PROMULGATED BY THE COMMIS-
SION IMPLEMENTING A RULE, UNIFORM STANDARD OR A PROVISION OF THIS
COMPACT.
(K) "PRODUCT" MEANS THE FORM OF THE CONTRACT, POLICY APPLICATION,
ENDORSEMENTS, CERTIFICATE FORMS, EVIDENCE OF COVERAGE FORMS AND RELATED
FORMS FOR AN INDIVIDUAL OR GROUP ANNUITY, LIFE INSURANCE, DISABILITY
INCOME OR LONG-TERM CARE INSURANCE PRODUCT, WHICH AN INSURER IS AUTHOR-
IZED TO ISSUE.
(L) "RULE" MEANS A STATEMENT OF GENERAL OR PARTICULAR APPLICABILITY
AND FUTURE EFFECT PROMULGATED BY THE COMMISSION, INCLUDING A UNIFORM
STANDARD DEVELOPED PURSUANT TO SECTION EIGHT THOUSAND EIGHT HUNDRED
EIGHT OF THIS ARTICLE, DESIGNED TO IMPLEMENT, INTERPRET, OR PRESCRIBE
LAW OR POLICY OR DESCRIBING THE ORGANIZATION, PROCEDURE, OR PRACTICE
REQUIREMENTS OF THE COMMISSION, WHICH SHALL HAVE THE FORCE AND EFFECT OF
LAW IN THE COMPACTING STATES.
(M) "STATE" MEANS ANY STATE, DISTRICT OR TERRITORY OF THE UNITED
STATES OF AMERICA.
(N) "THIRD-PARTY FILER" MEANS AN ENTITY THAT SUBMITS A PRODUCT FILING
TO THE COMMISSION ON BEHALF OF AN INSURER.
(O) "UNIFORM STANDARD" MEANS A STANDARD ADOPTED BY THE COMMISSION FOR
A PRODUCT LINE, PURSUANT TO SECTION EIGHT THOUSAND EIGHT HUNDRED EIGHT
OF THIS ARTICLE AND SHALL INCLUDE ALL OF THE PRODUCT REQUIREMENTS IN
AGGREGATE; PROVIDED, THAT EACH UNIFORM STANDARD SHALL BE CONSTRUED,
WHETHER EXPRESS OR IMPLIED, TO PROHIBIT THE USE OF ANY INCONSISTENT,
MISLEADING OR AMBIGUOUS PROVISIONS IN A PRODUCT AND THE FORM OF SUCH
PRODUCT MADE AVAILABLE TO THE PUBLIC SHALL NOT BE UNFAIR, INEQUITABLE OR
AGAINST PUBLIC POLICY AS DETERMINED BY THE COMMISSION.
S 8804. ESTABLISHMENT OF THE COMMISSION AND VENUE. (A) THE COMPACTING
STATES HEREBY CREATE AND ESTABLISH A JOINT PUBLIC AGENCY KNOWN AS THE
"INTERSTATE INSURANCE PRODUCT REGULATION COMMISSION". PURSUANT TO
SECTION EIGHT THOUSAND EIGHT HUNDRED EIGHT OF THIS ARTICLE, THE COMMIS-
SION SHALL HAVE THE POWER TO DEVELOP UNIFORM STANDARDS FOR PRODUCT
LINES, RECEIVE AND PROVIDE PROMPT REVIEW OF PRODUCTS FILED THEREWITH,
AND GIVE APPROVAL TO THOSE PRODUCT FILINGS SATISFYING APPLICABLE UNIFORM
STANDARDS; PROVIDED, HOWEVER, THAT IT IS NOT INTENDED FOR THE COMMISSION
TO BE THE EXCLUSIVE ENTITY FOR RECEIPT AND REVIEW OF INSURANCE PRODUCT
FILINGS. NOTHING IN THIS SECTION SHALL PROHIBIT ANY INSURER FROM FILING
ITS PRODUCT IN ANY STATE WHEREIN SUCH INSURER IS LICENSED TO CONDUCT THE
BUSINESS OF INSURANCE AND SUCH FILING SHALL BE SUBJECT TO THE LAWS OF
THE STATE WHERE FILED.
(B) THE COMMISSION IS A BODY CORPORATE AND POLITIC, AND AN INSTRUMEN-
TALITY OF THE COMPACTING STATES.
(C) THE COMMISSION IS A NOT-FOR-PROFIT ENTITY, SEPARATE AND DISTINCT
FROM THE INDIVIDUAL COMPACTING STATES.
(D) THE COMMISSION IS SOLELY RESPONSIBLE FOR ITS LIABILITIES UNLESS
OTHERWISE SPECIFICALLY PROVIDED IN THIS COMPACT, EXCEPT THAT, IN NO
EVENT SHALL THE OBLIGATIONS OF THE COMMISSION BE THE DEBT OF THE STATE

S. 2895 4

OF NEW YORK NOR SHALL ANY REVENUES OR PROPERTY OF THE STATE OF NEW YORK
BE LIABLE THEREFOR.
(E) VENUE IN PROPER AND JUDICIAL PROCEEDINGS BY OR AGAINST THE COMMIS-
SION SHALL BE BROUGHT SOLELY AND EXCLUSIVELY IN A COURT OF COMPETENT
JURISDICTION WHERE THE PRINCIPAL OFFICE OF THE COMMISSION IS LOCATED.
S 8805. POWERS OF THE COMMISSION. (A) THE COMMISSION SHALL HAVE THE
FOLLOWING POWERS:
(1) TO PROMULGATE RULES, PURSUANT TO SECTION EIGHT THOUSAND EIGHT
HUNDRED EIGHT OF THIS ARTICLE, WHICH SHALL HAVE THE FORCE AND EFFECT OF
LAW AND SHALL BE BINDING IN THE COMPACTING STATES TO THE EXTENT AND IN
THE MANNER PROVIDED IN THIS ARTICLE;
(2) TO EXERCISE ITS RULE MAKING AUTHORITY AND ESTABLISH REASONABLE
UNIFORM STANDARDS FOR PRODUCTS COVERED UNDER THE COMPACT, AND ADVERTISE-
MENT RELATED THERETO, WHICH SHALL HAVE THE FORCE AND EFFECT OF LAW AND
SHALL BE BINDING IN THE COMPACTING STATES, BUT ONLY FOR SUCH PRODUCTS
FILED WITH THE COMMISSION; PROVIDED, HOWEVER, THAT A COMPACTING STATE
SHALL HAVE THE RIGHT TO OPT OUT OF SUCH UNIFORM STANDARD PURSUANT TO
SECTION EIGHT THOUSAND EIGHT HUNDRED EIGHT OF THIS ARTICLE TO THE EXTENT
AND IN THE MANNER PROVIDED IN THIS ARTICLE, AND PROVIDED FURTHER THAT
ANY UNIFORM STANDARD ESTABLISHED BY THE COMMISSIONER FOR LONG-TERM CARE
INSURANCE PRODUCTS MAY PROVIDE THE SAME OR GREATER PROTECTIONS FOR
CONSUMERS AS, BUT SHALL NOT PROVIDE LESS THAN, THOSE PROTECTIONS SET
FORTH IN THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS' (HEREIN-
AFTER REFERRED TO AS THE "NAIC") LONG-TERM CARE INSURANCE MODEL ACT AND
LONG-TERM CARE INSURANCE MODEL REGULATION, RESPECTIVELY, ADOPTED AS OF
2001. THE COMMISSION SHALL CONSIDER WHETHER ANY SUBSEQUENT AMENDMENTS TO
THE NAIC LONG-TERM CARE INSURANCE MODEL ACT OR LONG-TERM CARE INSURANCE
MODEL REGULATION ADOPTED BY THE NAIC REQUIRE AMENDING OF THE UNIFORM
STANDARDS ESTABLISHED BY THE COMMISSION FOR LONG-TERM INSURANCE
PRODUCTS;
(3) TO RECEIVE AND REVIEW IN AN EXPEDITIOUS MANNER PRODUCTS FILED WITH
THE COMMISSION, INCLUDING RATE FILINGS FOR DISABILITY INCOME AND
LONG-TERM CARE INSURANCE PRODUCTS, AND GIVE APPROVAL OF THOSE PRODUCTS
AND RATE FILINGS THAT SATISFY THE APPLICABLE UNIFORM STANDARD, WHERE
SUCH APPROVAL SHALL HAVE THE FORCE AND EFFECT OF LAW AND BE BINDING ON
THE COMPACTING STATES TO THE EXTENT AND IN THE MANNER PROVIDED IN THE
COMPACT;
(4) TO RECEIVE AND REVIEW IN AN EXPEDITIOUS MANNER ADVERTISEMENT
RELATING TO LONG-TERM CARE INSURANCE PRODUCTS FOR WHICH UNIFORM STAND-
ARDS HAVE BEEN ADOPTED BY THE COMMISSION, AND GIVE APPROVAL OF SUCH
ADVERTISEMENT THAT SATISFIES THE APPLICABLE UNIFORM STANDARD. FOR ANY
PRODUCT COVERED UNDER THIS ARTICLE, OTHER THAN LONG-TERM CARE INSURANCE
PRODUCTS, THE COMMISSION SHALL HAVE THE AUTHORITY TO REQUIRE AN INSURER
TO SUBMIT ALL OR ANY PART OF ITS ADVERTISEMENT WITH RESPECT TO THAT
PRODUCT FOR REVIEW OR APPROVAL PRIOR TO USE IF THE COMMISSION DETERMINES
THAT THE NATURE OF THE PRODUCT IS SUCH THAT AN ADVERTISEMENT OF THE
PRODUCT COULD HAVE THE CAPACITY OR TENDENCY TO MISLEAD THE PUBLIC. THE
ACTIONS OF THE COMMISSION AS PROVIDED IN THIS SECTION SHALL HAVE THE
FORCE AND EFFECT OF LAW AND SHALL BE BINDING IN THE COMPACTING STATES TO
THE EXTENT AND IN THE MANNER PROVIDED IN THE COMPACT;
(5) TO EXERCISE ITS RULE MAKING AUTHORITY AND DESIGNATE PRODUCTS AND
ADVERTISEMENT THAT MAY BE SUBJECT TO A SELF-CERTIFICATION PROCESS WITH-
OUT THE NEED FOR PRIOR APPROVAL BY THE COMMISSION;
(6) TO PROMULGATE OPERATING PROCEDURES, PURSUANT TO SECTION EIGHT
THOUSAND EIGHT HUNDRED EIGHT OF THIS ARTICLE, WHICH SHALL BE BINDING IN

S. 2895 5

THE COMPACTING STATES TO THE EXTENT AND IN THE MANNER PROVIDED IN THE
COMPACT;
(7) TO BRING AND PROSECUTE LEGAL PROCEEDINGS OR ACTIONS IN ITS NAME AS
THE COMMISSION; PROVIDED, THAT THE STANDING OF ANY STATE INSURANCE
DEPARTMENT TO SUE OR BE SUED UNDER APPLICABLE LAW SHALL NOT BE AFFECTED;
(8) TO ISSUE SUBPOENAS REQUIRING THE ATTENDANCE AND TESTIMONY OF
WITNESSES AND THE PRODUCTION OF EVIDENCE;
(9) TO ESTABLISH AND MAINTAIN OFFICES;
(10) TO PURCHASE AND MAINTAIN INSURANCE AND BONDS;
(11) TO BORROW, ACCEPT OR CONTRACT FOR SERVICES OF PERSONNEL, INCLUD-
ING, BUT NOT LIMITED TO, EMPLOYEES OF A COMPACTING STATE;
(12) TO HIRE EMPLOYEES, PROFESSIONALS OR SPECIALISTS, AND ELECT OR
APPOINT OFFICERS, AND TO FIX THEIR COMPENSATION, DEFINE THEIR DUTIES AND
GIVE THEM APPROPRIATE AUTHORITY TO CARRY OUT THE PURPOSES OF THE
COMPACT, AND DETERMINE THEIR QUALIFICATIONS; AND TO ESTABLISH THE
COMMISSION'S PERSONNEL POLICIES AND PROGRAMS RELATING TO, AMONG OTHER
THINGS, CONFLICTS OF INTEREST, RATES OF COMPENSATION AND QUALIFICATIONS
OF PERSONNEL;
(13) TO ACCEPT ANY AND ALL APPROPRIATE DONATIONS AND GRANTS OF MONEY,
EQUIPMENT, SUPPLIES, MATERIALS AND SERVICES, AND TO RECEIVE, UTILIZE AND
DISPOSE OF THE SAME; PROVIDED THAT AT ALL TIMES THE COMMISSION SHALL
STRIVE TO AVOID ANY APPEARANCE OF IMPROPRIETY;
(14) TO LEASE, PURCHASE, ACCEPT APPROPRIATE GIFTS OR DONATIONS OF, OR
OTHERWISE TO OWN, HOLD, IMPROVE OR USE, ANY PROPERTY, REAL, PERSONAL OR
MIXED; PROVIDED THAT AT ALL TIMES THE COMMISSION SHALL STRIVE TO AVOID
ANY APPEARANCE OF IMPROPRIETY;
(15) TO SELL, CONVEY, MORTGAGE, PLEDGE, LEASE, EXCHANGE, ABANDON OR
OTHERWISE DISPOSE OF ANY PROPERTY, REAL, PERSONAL OR MIXED;
(16) TO REMIT FILING FEES TO COMPACTING STATES AS MAY BE SET FORTH IN
THE BY-LAWS, RULES OR OPERATING PROCEDURES;
(17) TO ENFORCE COMPLIANCE BY COMPACTING STATES WITH RULES, UNIFORM
STANDARDS, OPERATING PROCEDURES AND BY-LAWS;
(18) TO PROVIDE FOR DISPUTE RESOLUTION AMONG COMPACTING STATES;
(19) TO ADVISE COMPACTING STATES ON ISSUES RELATING TO INSURERS DOMI-
CILED OR DOING BUSINESS IN NON-COMPACTING JURISDICTIONS, CONSISTENT WITH
THE PURPOSES OF THE COMPACT;
(20) TO PROVIDE ADVICE AND TRAINING TO THOSE PERSONNEL IN STATE INSUR-
ANCE DEPARTMENTS RESPONSIBLE FOR PRODUCT REVIEW, AND TO BE A RESOURCE
FOR STATE INSURANCE DEPARTMENTS;
(21) TO ESTABLISH A BUDGET AND MAKE EXPENDITURES;
(22) TO BORROW MONEY;
(23) TO APPOINT COMMITTEES, INCLUDING ADVISORY COMMITTEES COMPRISING
MEMBERS, STATE INSURANCE REGULATORS, STATE LEGISLATORS OR THEIR REPRE-
SENTATIVES, INSURANCE INDUSTRY AND CONSUMER REPRESENTATIVES, AND SUCH
OTHER INTERESTED PERSONS AS MAY BE DESIGNATED IN THE BY-LAWS;
(24) TO PROVIDE AND RECEIVE INFORMATION FROM, AND TO COOPERATE WITH
LAW ENFORCEMENT AGENCIES;
(25) TO ADOPT AND USE A CORPORATE SEAL; AND
(26) TO PERFORM SUCH OTHER FUNCTIONS AS MAY BE NECESSARY OR APPROPRI-
ATE TO ACHIEVE THE PURPOSES OF THIS COMPACT CONSISTENT WITH THE STATE
REGULATION OF THE BUSINESS OF INSURANCE.
(B) ALL DONATIONS, GRANTS OF MONEY, EQUIPMENT, SUPPLIES, MATERIALS OR
SERVICES, PURCHASES, GIFTS, DONATIONS, CONVEYANCES, MORTGAGES, PLEDGES,
LEASES AND EXCHANGES, AS AUTHORIZED BY SUBSECTION (A) OF THIS SECTION,
RECEIVED BY OR ON BEHALF OF THE COMMISSION SHALL BE LIMITED TO THE

S. 2895 6

DIRECT FUNDING OF THE LAWFUL AND AUTHORIZED OPERATIONS OF THE COMMIS-
SION.
S 8806. ORGANIZATION OF THE COMMISSION. (A) EACH COMPACTING STATE
SHALL HAVE AND BE LIMITED TO ONE MEMBER. THE SUPERINTENDENT, OR HIS OR
HER DESIGNATED REPRESENTATIVE, SHALL BE NEW YORK'S MEMBER OF SUCH
COMMISSION. EACH MEMBER SHALL BE QUALIFIED TO SERVE IN SUCH CAPACITY
PURSUANT TO APPLICABLE LAW OF THE COMPACTING STATE. ANY MEMBER MAY BE
REMOVED OR SUSPENDED FROM OFFICE AS PROVIDED BY THE LAW OF THE STATE
FROM WHICH HE OR SHE SHALL BE APPOINTED. ANY VACANCY OCCURRING IN THE
COMMISSION SHALL BE FILLED IN ACCORDANCE WITH THE LAWS OF THE COMPACTING
STATE WHEREIN SUCH VACANCY EXISTS. NOTHING HEREIN SHALL BE CONSTRUED TO
AFFECT THE MANNER IN WHICH A COMPACTING STATE DETERMINES THE ELECTION OR
APPOINTMENT AND QUALIFICATION OF ITS OWN COMMISSIONER.
(B) EACH MEMBER SHALL BE ENTITLED TO ONE VOTE AND SHALL HAVE AN OPPOR-
TUNITY TO PARTICIPATE IN THE GOVERNANCE OF THE COMMISSION IN ACCORDANCE
WITH THE BY-LAWS. NOTWITHSTANDING ANY PROVISION OF THIS ARTICLE TO THE
CONTRARY, NO ACTION OF THE COMMISSION WITH RESPECT TO THE PROMULGATION
OF A UNIFORM STANDARD SHALL BE EFFECTIVE UNLESS TWO-THIRDS OF THE
MEMBERS VOTE IN FAVOR THEREOF.
(C) THE COMMISSION SHALL, BY A MAJORITY OF THE MEMBERS, PRESCRIBE
BY-LAWS TO GOVERN ITS CONDUCT AS MAY BE NECESSARY OR APPROPRIATE TO
CARRY OUT THE PURPOSES, AND EXERCISE THE POWERS, OF THE COMPACT, INCLUD-
ING, BUT NOT LIMITED TO:
(1) ESTABLISHING THE FISCAL YEAR OF THE COMMISSION;
(2) PROVIDING REASONABLE PROCEDURES FOR HOLDING MEETINGS OF THE
MANAGEMENT COMMITTEE;
(3) PROVIDING REASONABLE STANDARDS AND PROCEDURES FOR THE ESTABLISH-
MENT OF OTHER COMMITTEES, AND GOVERNING ANY GENERAL OR SPECIFIC DELEG-
ATION OF ANY AUTHORITY OR FUNCTION OF THE COMMISSION;
(4) PROVIDING REASONABLE PROCEDURES FOR CALLING AND CONDUCTING MEET-
INGS OF THE COMMISSION THAT CONSIST OF A MAJORITY OF COMMISSION MEMBERS,
ENSURING REASONABLE ADVANCE NOTICE OF EACH SUCH MEETING, AND PROVIDING
FOR THE RIGHT OF CITIZENS TO ATTEND EACH SUCH MEETING WITH ENUMERATED
EXCEPTIONS DESIGNED TO PROTECT THE PUBLIC'S INTEREST, THE PRIVACY OF
INDIVIDUALS AND INSURERS' PROPRIETARY INFORMATION, INCLUDING TRADE
SECRETS. THE COMMISSION MAY MEET IN CAMERA ONLY AFTER A MAJORITY OF THE
ENTIRE MEMBERSHIP VOTES TO CLOSE A MEETING IN TOTO OR IN PART. AS SOON
AS PRACTICABLE, THE COMMISSION MUST MAKE PUBLIC A COPY OF THE VOTE TO
CLOSE THE MEETING REVEALING THE VOTE OF EACH MEMBER WITH NO PROXY VOTES
ALLOWED, AND VOTES TAKEN DURING SUCH MEETING;
(5) ESTABLISHING THE TITLES, DUTIES AND AUTHORITY AND REASONABLE
PROCEDURES FOR THE ELECTION OF THE OFFICERS OF THE COMMISSION;
(6) PROVIDING REASONABLE STANDARDS AND PROCEDURES FOR THE ESTABLISH-
MENT OF THE PERSONNEL POLICIES AND PROGRAMS OF THE COMMISSION. NOTWITH-
STANDING ANY CIVIL SERVICE OR OTHER SIMILAR LAWS OF ANY COMPACTING
STATE, THE BY-LAWS SHALL EXCLUSIVELY GOVERN THE PERSONNEL POLICIES AND
PROGRAMS OF THE COMMISSION;
(7) PROMULGATING A CODE OF ETHICS TO ADDRESS PERMISSIBLE AND PROHIBIT-
ED ACTIVITIES OF COMMISSION MEMBERS AND EMPLOYEES; AND
(8) PROVIDING A MECHANISM FOR WINDING UP THE OPERATIONS OF THE COMMIS-
SION AND THE EQUITABLE DISPOSITION OF ANY SURPLUS FUNDS THAT MAY EXIST
AFTER THE TERMINATION OF THE COMPACT AFTER THE PAYMENT AND/OR RESERVING
OF ALL OF ITS DEBTS AND OBLIGATIONS.
(D) THE COMMISSION SHALL PUBLISH ITS BY-LAWS IN A CONVENIENT FORM AND
FILE A COPY THEREOF AND A COPY OF ANY AMENDMENT THERETO, WITH THE APPRO-
PRIATE AGENCY OR OFFICER IN EACH OF THE COMPACTING STATES.

S. 2895 7

(E) A MANAGEMENT COMMITTEE COMPRISING NO MORE THAN FOURTEEN MEMBERS
SHALL BE ESTABLISHED AS FOLLOWS:
(1) ONE MEMBER FROM EACH OF THE SIX COMPACTING STATES WITH THE LARGEST
PREMIUM VOLUME FOR INDIVIDUAL AND GROUP ANNUITIES, LIFE, DISABILITY
INCOME AND LONG-TERM CARE INSURANCE PRODUCTS, DETERMINED FROM THE
RECORDS OF THE NAIC AS OF DECEMBER THIRTY-FIRST OF THE PRIOR YEAR;
(2) FOUR MEMBERS FROM THOSE COMPACTING STATES WITH AT LEAST TWO
PERCENT OF THE MARKET BASED ON THE PREMIUM VOLUME DESCRIBED IN PARAGRAPH
ONE OF THIS SUBSECTION, OTHER THAN SIX COMPACTING STATES WITH THE LARG-
EST PREMIUM VOLUME, SELECTED ON A ROTATING BASIS AS PROVIDED IN THE
BY-LAWS; AND
(3) FOUR MEMBERS FROM THOSE COMPACTING STATES WITH LESS THAN TWO
PERCENT OF THE MARKET, BASED ON THE PREMIUM VOLUME DESCRIBED IN PARA-
GRAPH ONE OF THIS SUBSECTION, WITH ONE SELECTED FROM EACH OF THE FOUR
ZONE REGIONS OF THE NAIC AS PROVIDED IN THE BY-LAWS.
(F) THE MANAGEMENT COMMITTEE SHALL HAVE SUCH AUTHORITY AND DUTIES AS
MAY BE SET FORTH IN THE BY-LAWS, INCLUDING BUT NOT LIMITED TO:
(1) MANAGING THE AFFAIRS OF THE COMMISSION IN A MANNER CONSISTENT WITH
THE BY-LAWS AND PURPOSES OF THE COMMISSION;
(2) ESTABLISHING AND OVERSEEING AN ORGANIZATIONAL STRUCTURE WITHIN,
AND APPROPRIATE PROCEDURES FOR, THE COMMISSION TO PROVIDE FOR THE
CREATION OF UNIFORM STANDARDS AND OTHER RULES, RECEIPT AND REVIEW OF
PRODUCT FILINGS, ADMINISTRATIVE AND TECHNICAL SUPPORT FUNCTIONS, REVIEW
OF DECISIONS REGARDING THE DISAPPROVAL OF A PRODUCT FILING, AND THE
REVIEW OF ELECTIONS MADE BY A COMPACTING STATE TO OPT OUT OF A UNIFORM
STANDARD; PROVIDED THAT A UNIFORM STANDARD SHALL NOT BE SUBMITTED TO THE
COMPACTING STATES FOR ADOPTION UNLESS APPROVED BY TWO-THIRDS OF THE
MEMBERS OF THE MANAGEMENT COMMITTEE;
(3) OVERSEEING THE OFFICES OF THE COMMISSION; AND
(4) PLANNING, IMPLEMENTING, AND COORDINATING COMMUNICATIONS AND ACTIV-
ITIES WITH OTHER STATE, FEDERAL AND LOCAL GOVERNMENT ORGANIZATIONS IN
ORDER TO ADVANCE THE GOALS OF THE COMMISSION.
(G) THE COMMISSION SHALL ELECT ANNUALLY OFFICERS FROM THE MANAGEMENT
COMMITTEE, WITH EACH HAVING SUCH AUTHORITY AND DUTIES, AS MAY BE SPECI-
FIED IN THE BY-LAWS.
(H) THE MANAGEMENT COMMITTEE MAY, SUBJECT TO THE APPROVAL OF THE
COMMISSION, APPOINT OR RETAIN AN EXECUTIVE DIRECTOR FOR SUCH PERIOD,
UPON SUCH TERMS AND CONDITIONS AND FOR SUCH COMPENSATION AS THE COMMIS-
SION MAY DEEM APPROPRIATE. THE EXECUTIVE DIRECTOR SHALL SERVE AS SECRE-
TARY TO THE COMMISSION, BUT SHALL NOT BE A MEMBER OF THE COMMISSION. THE
EXECUTIVE DIRECTOR SHALL HIRE AND SUPERVISE SUCH OTHER STAFF AS MAY BE
AUTHORIZED BY THE COMMISSION.
(I) A LEGISLATIVE COMMITTEE COMPRISING STATE LEGISLATORS OR THEIR
DESIGNEES SHALL BE ESTABLISHED TO MONITOR THE OPERATIONS OF, AND MAKE
RECOMMENDATIONS TO, THE COMMISSION; PROVIDED THAT THE MANNER OF
SELECTION AND TERM OF ANY LEGISLATIVE COMMITTEE MEMBER SHALL BE AS SET
FORTH IN THE BY-LAWS. PRIOR TO THE ADOPTION BY THE COMMISSION OF ANY
UNIFORM STANDARD, REVISION TO THE BY-LAWS, ANNUAL BUDGET OR OTHER
SIGNIFICANT MATTER AS MAY BE PROVIDED IN THE BY-LAWS, THE MANAGEMENT
COMMITTEE SHALL CONSULT WITH AND REPORT TO THE LEGISLATIVE COMMITTEE.
(J) THE COMMISSION SHALL ESTABLISH TWO ADVISORY COMMITTEES, ONE OF
WHICH SHALL COMPRISE CONSUMER REPRESENTATIVES INDEPENDENT OF THE INSUR-
ANCE INDUSTRY AND THE OTHER COMPRISING INSURANCE INDUSTRY REPRESEN-
TATIVES.
(K) THE COMMISSION MAY ESTABLISH ADDITIONAL ADVISORY COMMITTEES AS ITS
BY-LAWS MAY PROVIDE FOR THE CARRYING OUT OF ITS FUNCTIONS.

S. 2895 8

(L) THE COMMISSION SHALL MAINTAIN ITS CORPORATE BOOKS AND RECORDS IN
ACCORDANCE WITH THE BY-LAWS.
(M) THE MEMBERS, OFFICERS, EXECUTIVE DIRECTOR, EMPLOYEES AND REPRESEN-
TATIVES OF THE COMMISSION SHALL BE IMMUNE FROM SUIT AND LIABILITY,
EITHER PERSONALLY OR IN THEIR OFFICIAL CAPACITY, FOR ANY ACTION TAKEN
REASONABLY AND IN GOOD FAITH WHICH RESULTS IN A CLAIM FOR DAMAGE TO OR
LOSS OF PROPERTY OR PERSONAL INJURY OR OTHER CIVIL LIABILITY CAUSED BY
OR ARISING OUT OF ANY ACTUAL OR ALLEGED ACT, ERROR OR OMISSION THAT
OCCURRED, OR THAT SUCH PERSON HAD A REASONABLE BASIS FOR BELIEVING
OCCURRED WITHIN THE SCOPE OF COMMISSION EMPLOYMENT, DUTIES OR RESPONSI-
BILITIES; PROVIDED, THAT NOTHING IN THIS SECTION SHALL BE CONSTRUED TO
PROTECT ANY SUCH PERSON FROM SUIT AND/OR LIABILITY FOR ANY DAMAGE, LOSS,
INJURY OR LIABILITY CAUSED BY THE INTENTIONAL OR WILLFUL AND WANTON
MISCONDUCT OF THAT PERSON.
(N) THE COMMISSION SHALL DEFEND ANY MEMBER, OFFICER, EXECUTIVE DIREC-
TOR, EMPLOYEE OR REPRESENTATIVE OF THE COMMISSION IN ANY CIVIL ACTION
SEEKING TO IMPOSE LIABILITY ARISING OUT OF ANY ACTUAL OR ALLEGED ACT,
ERROR OR OMISSION THAT OCCURRED WITHIN THE SCOPE OF COMMISSION EMPLOY-
MENT, DUTIES OR RESPONSIBILITIES, OR THAT THE DEFENDANT HAD A REASONABLE
BASIS FOR BELIEVING OCCURRED WITHIN THE SCOPE OF COMMISSION EMPLOYMENT,
DUTIES OR RESPONSIBILITIES; PROVIDED, THAT NOTHING IN THIS SECTION SHALL
BE CONSTRUED TO PROHIBIT THAT PERSON FROM RETAINING HIS OR HER OWN COUN-
SEL; AND PROVIDED FURTHER, THAT THE ACTUAL OR ALLEGED ACT, ERROR OR
OMISSION DID NOT RESULT FROM THAT PERSON'S INTENTIONAL OR WILLFUL AND
WANTON MISCONDUCT.
(O) THE COMMISSION SHALL INDEMNIFY AND HOLD HARMLESS ANY MEMBER, OFFI-
CER, EXECUTIVE DIRECTOR, EMPLOYEE OR REPRESENTATIVE OF THE COMMISSION
FOR THE AMOUNT OF ANY SETTLEMENT OR JUDGMENT OBTAINED AGAINST SUCH
PERSONS ARISING OUT OF ANY ACTUAL OR ALLEGED ACT, ERROR OR OMISSION THAT
OCCURRED WITHIN THE SCOPE OF COMMISSION EMPLOYMENT, DUTIES OR RESPONSI-
BILITIES, OR THAT SUCH PERSON HAD A REASONABLE BASIS FOR BELIEVING
OCCURRED WITHIN THE SCOPE OF COMMISSION EMPLOYMENT, DUTIES OR RESPONSI-
BILITIES, PROVIDED, THAT THE ACTUAL OR ALLEGED ACT, ERROR OR OMISSION
DID NOT RESULT FROM THE INTENTIONAL OR WILLFUL AND WANTON MISCONDUCT OF
ANY SUCH PERSON.
S 8807. MEETINGS AND ACTS OF THE COMMISSION. (A) THE COMMISSION SHALL
MEET AND TAKE SUCH ACTIONS AS ARE CONSISTENT WITH THE PROVISIONS OF THIS
COMPACT AND THE BY-LAWS.
(B) EACH MEMBER OF THE COMMISSION SHALL HAVE THE RIGHT AND POWER TO
CAST A VOTE TO WHICH THAT COMPACTING STATE IS ENTITLED AND TO PARTIC-
IPATE IN THE BUSINESS AND AFFAIRS OF THE COMMISSION. A MEMBER SHALL VOTE
IN PERSON OR BY SUCH OTHER MEANS AS PROVIDED IN THE BY-LAWS. THE BY-LAWS
MAY PROVIDE FOR MEMBERS' PARTICIPATION IN MEETINGS BY TELEPHONE OR OTHER
MEANS OF COMMUNICATION.
(C) THE COMMISSION SHALL MEET AT LEAST ONCE DURING EACH CALENDAR YEAR.
ADDITIONAL MEETINGS SHALL BE HELD AS SET FORTH IN THE BY-LAWS.
S 8808. RULES AND OPERATING PROCEDURES; RULE MAKING FUNCTIONS OF THE
COMMISSION AND OPTING OUT OF UNIFORM STANDARDS. (A) THE COMMISSION SHALL
PROMULGATE REASONABLE RULES, INCLUDING UNIFORM STANDARDS AND OPERATING
PROCEDURES, IN ORDER TO EFFECTIVELY AND EFFICIENTLY ACHIEVE THE PURPOSES
OF THE COMPACT. NOTWITHSTANDING THE FOREGOING, IN THE EVENT THE COMMIS-
SION EXERCISES ITS RULE MAKING AUTHORITY IN A MANNER THAT IS BEYOND THE
SCOPE OF THE PURPOSES OF THIS ARTICLE, OR THE POWERS GRANTED IN THIS
SECTION, THEN SUCH ACTION BY THE COMMISSION SHALL BE INVALID AND HAVE NO
FORCE AND EFFECT.

S. 2895 9

(B) RULES AND OPERATING PROCEDURES SHALL BE MADE PURSUANT TO A RULE
MAKING PROCESS THAT CONFORMS TO THE MODEL STATE ADMINISTRATIVE PROCEDURE
ACT OF 1981 AS AMENDED, AS MAY BE APPROPRIATE TO THE OPERATIONS OF THE
COMMISSION. BEFORE THE COMMISSION ADOPTS A UNIFORM STANDARD, THE COMMIS-
SION SHALL GIVE WRITTEN NOTICE TO THE RELEVANT STATE LEGISLATIVE COMMIT-
TEE IN EACH COMPACTING STATE RESPONSIBLE FOR INSURANCE ISSUES OF ITS
INTENTION TO ADOPT SUCH UNIFORM STANDARD. THE COMMISSION IN ADOPTING A
UNIFORM STANDARD SHALL CONSIDER FULLY ALL SUBMITTED MATERIALS AND ISSUE
A CONCISE EXPLANATION OF ITS DECISION.
(C) A UNIFORM STANDARD SHALL BECOME EFFECTIVE NINETY DAYS AFTER ITS
PROMULGATION BY THE COMMISSION OR SUCH LATER DATE AS THE COMMISSION MAY
DETERMINE; PROVIDED, HOWEVER, THAT A COMPACTING STATE MAY OPT OUT OF A
UNIFORM STANDARD AS PROVIDED IN THIS ARTICLE. "OPT OUT" SHALL BE DEFINED
AS ANY ACTION BY A COMPACTING STATE TO DECLINE TO ADOPT OR PARTICIPATE
IN A PROMULGATED UNIFORM STANDARD. ALL OTHER RULES AND OPERATING PROCE-
DURES, AND AMENDMENTS THERETO, SHALL BECOME EFFECTIVE AS OF THE DATE
SPECIFIED IN EACH RULE, OPERATING PROCEDURE OR AMENDMENT.
(D) A COMPACTING STATE MAY OPT OUT OF A UNIFORM STANDARD, EITHER BY
LEGISLATION OR REGULATION DULY PROMULGATED BY THE INSURANCE DEPARTMENT
UNDER THE COMPACTING STATE'S ADMINISTRATIVE PROCEDURE ACT. IF A COMPACT-
ING STATE ELECTS TO OPT OUT OF A UNIFORM STANDARD BY REGULATION, IT MUST
GIVE WRITTEN NOTICE TO THE COMMISSION NO LATER THAN TEN BUSINESS DAYS
AFTER THE LATER OF THE UNIFORM STANDARD IS PROMULGATED OR AT THE TIME
THE STATE BECOMES A COMPACTING STATE, AND FIND THAT THE UNIFORM STANDARD
DOES NOT PROVIDE REASONABLE PROTECTIONS TO THE CITIZENS OF THE STATE
GIVEN THE CONDITIONS IN THE STATE. THE COMMISSIONER SHALL MAKE SPECIFIC
FINDINGS OF FACT AND CONCLUSIONS OF LAW, BASED ON A PREPONDERANCE OF THE
EVIDENCE, DETAILING THE CONDITIONS IN THE STATE WHICH WARRANT A DEPAR-
TURE FROM THE UNIFORM STANDARD AND DETERMINING THAT THE UNIFORM STANDARD
WOULD NOT REASONABLY PROTECT THE CITIZENS OF THE STATE. THE COMMISSIONER
MUST CONSIDER AND BALANCE THE FOLLOWING FACTORS AND FIND THAT THE CONDI-
TIONS IN THE STATE AND NEEDS OF THE CITIZENS OF THE STATE OUTWEIGH:
(1) THE INTENT OF THE LEGISLATURE TO PARTICIPATE IN, AND THE BENEFITS
OF, AN INTERSTATE AGREEMENT TO ESTABLISH NATIONAL UNIFORM CONSUMER
PROTECTIONS FOR THE PRODUCTS SUBJECT TO THIS ARTICLE; AND
(2) THE PRESUMPTION THAT A UNIFORM STANDARD ADOPTED BY THE COMMISSION
PROVIDES REASONABLE PROTECTIONS TO CONSUMERS OF THE RELEVANT PRODUCT.
NOTWITHSTANDING THE FOREGOING, A COMPACTING STATE MAY, AT THE TIME OF
ITS ENACTMENT OF THE COMPACT, PROSPECTIVELY OPT OUT OF ALL UNIFORM STAN-
DARDS INVOLVING THE LONG-TERM CARE INSURANCE PRODUCTS BY EXPRESSLY
PROVIDING FOR SUCH OPT OUT IN THE ENACTED COMPACT, AND SUCH OPT OUT
SHALL NOT BE TREATED AS A MATERIAL VARIANCE IN THE OFFER OR ACCEPTANCE
OF ANY STATE TO PARTICIPATE IN THE COMPACT. SUCH AN OPT OUT SHALL BE
EFFECTIVE AT THE TIME OF ENACTMENT OF THE COMPACT BY THE COMPACTING
STATE AND SHALL APPLY TO ALL EXISTING UNIFORM STANDARDS INVOLVING LONG-
TERM CARE INSURANCE PRODUCTS AND THOSE SUBSEQUENTLY PROMULGATED.
(E) IF A COMPACTING STATE ELECTS TO OPT OUT OF A UNIFORM STANDARD, THE
UNIFORM STANDARD SHALL REMAIN APPLICABLE IN THE COMPACTING STATE ELECT-
ING TO OPT OUT UNTIL SUCH TIME THE OPT OUT LEGISLATION IS ENACTED INTO
LAW OR THE REGULATION OPTING OUT BECOMES EFFECTIVE.
(F) ONCE THE OPT OUT OF A UNIFORM STANDARD BY A COMPACTING STATE
BECOMES EFFECTIVE AS PROVIDED UNDER THE LAWS OF THAT STATE, THE UNIFORM
STANDARD SHALL HAVE NO FURTHER FORCE AND EFFECT IN THAT STATE UNLESS AND
UNTIL THE LEGISLATION OR REGULATION IMPLEMENTING THE OPT OUT IS REPEALED
OR OTHERWISE BECOMES INEFFECTIVE UNDER THE LAWS OF THE STATE. IF A
COMPACTING STATE OPTS OUT OF A UNIFORM STANDARD AFTER THE UNIFORM STAND-

S. 2895 10

ARD HAS BEEN MADE EFFECTIVE IN THAT STATE, THE OPT OUT SHALL HAVE THE
SAME PROSPECTIVE EFFECT AS PROVIDED UNDER SECTION EIGHT THOUSAND EIGHT
HUNDRED FIFTEEN OF THIS ARTICLE FOR WITHDRAWALS.
(G) IF A COMPACTING STATE HAS FORMALLY INITIATED THE PROCESS OF OPTING
OUT OF A UNIFORM STANDARD BY REGULATION, AND WHILE THE REGULATORY OPT
OUT IS PENDING, THE COMPACTING STATE MAY PETITION THE COMMISSION, AT
LEAST FIFTEEN DAYS BEFORE THE EFFECTIVE DATE OF THE UNIFORM STANDARD, TO
STAY THE EFFECTIVENESS OF THE UNIFORM STANDARD IN THAT STATE. THE
COMMISSION MAY GRANT A STAY IF IT DETERMINES THE REGULATORY OPT OUT IS
BEING PURSUED IN A REASONABLE MANNER AND THERE IS A LIKELIHOOD OF
SUCCESS. IF A STAY IS GRANTED OR EXTENDED BY THE COMMISSION, THE STAY OR
EXTENSION THEREOF MAY POSTPONE THE EFFECTIVE DATE BY UP TO NINETY DAYS,
UNLESS AFFIRMATIVELY EXTENDED BY THE COMMISSION; PROVIDED HOWEVER, A
STAY MAY NOT BE PERMITTED TO REMAIN IN EFFECT FOR MORE THAN ONE YEAR
UNLESS THE COMPACTING STATE CAN SHOW EXTRAORDINARY CIRCUMSTANCES WHICH
WARRANT A CONTINUANCE OF THE STAY INCLUDING, BUT NOT LIMITED TO, THE
EXISTENCE OF A LEGAL CHALLENGE WHICH PREVENTS THE COMPACTING STATE FROM
OPTING OUT. A STAY MAY BE TERMINATED BY THE COMMISSION UPON NOTICE THAT
THE RULE MAKING PROCESS HAS BEEN TERMINATED.
(H) NOT LATER THAN THIRTY DAYS AFTER A RULE OR OPERATING PROCEDURE IS
PROMULGATED, ANY PERSON MAY FILE A PETITION FOR JUDICIAL REVIEW OF THE
RULE OR OPERATING PROCEDURE; PROVIDED, HOWEVER, THAT THE FILING OF SUCH
A PETITION SHALL NOT STAY OR OTHERWISE PREVENT THE RULE OR OPERATING
PROCEDURE FROM BECOMING EFFECTIVE UNLESS THE COURT FINDS THAT THE PETI-
TIONER HAS A SUBSTANTIAL LIKELIHOOD OF SUCCESS. THE COURT SHALL GIVE
DEFERENCE TO THE ACTIONS OF THE COMMISSION CONSISTENT WITH APPLICABLE
LAW AND SHALL NOT FIND THE RULE OR OPERATING PROCEDURE TO BE UNLAWFUL IF
THE RULE OR OPERATING PROCEDURE REPRESENTS A REASONABLE EXERCISE OF THE
COMMISSION'S AUTHORITY.
S 8809. COMMISSION RECORDS AND ENFORCEMENT. (A) THE COMMISSION SHALL
PROMULGATE RULES ESTABLISHING CONDITIONS AND PROCEDURES FOR PUBLIC
INSPECTION AND COPYING OF ITS INFORMATION AND OFFICIAL RECORDS, EXCEPT
SUCH INFORMATION AND RECORDS INVOLVING THE PRIVACY OF INDIVIDUALS AND
INSURERS' TRADE SECRETS. THE COMMISSION MAY PROMULGATE ADDITIONAL RULES
UNDER WHICH IT MAY MAKE AVAILABLE TO FEDERAL AND STATE AGENCIES, INCLUD-
ING LAW ENFORCEMENT AGENCIES, RECORDS AND INFORMATION OTHERWISE EXEMPT
FROM DISCLOSURE, AND MAY ENTER INTO AGREEMENTS WITH SUCH AGENCIES TO
RECEIVE OR EXCHANGE INFORMATION OR RECORDS SUBJECT TO NONDISCLOSURE AND
CONFIDENTIALITY PROVISIONS.
(B) EXCEPT AS TO PRIVILEGED RECORDS, DATA AND INFORMATION, THE LAWS OF
ANY COMPACTING STATE PERTAINING TO CONFIDENTIALITY OR NONDISCLOSURE
SHALL NOT RELIEVE ANY COMPACTING STATE COMMISSIONER OF THE DUTY TO
DISCLOSE ANY RELEVANT RECORDS, DATA OR INFORMATION TO THE COMMISSION;
PROVIDED HOWEVER, THAT DISCLOSURE TO THE COMMISSION SHALL NOT BE DEEMED
TO WAIVE OR OTHERWISE AFFECT ANY CONFIDENTIALITY REQUIREMENT; AND
PROVIDED FURTHER THAT, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
ARTICLE, THE COMMISSION SHALL NOT BE SUBJECT TO THE LAWS OF ANY COMPACT-
ING STATE PERTAINING TO CONFIDENTIALITY AND NONDISCLOSURE WITH RESPECT
TO RECORDS, DATA AND INFORMATION IN ITS POSSESSION. CONFIDENTIAL INFOR-
MATION OF THE COMMISSION SHALL REMAIN CONFIDENTIAL AFTER SUCH INFORMA-
TION IS PROVIDED TO ANY COMMISSIONER.
(C) THE COMMISSION SHALL MONITOR COMPACTING STATES FOR COMPLIANCE WITH
DULY ADOPTED BY-LAWS, RULES, INCLUDING UNIFORM STANDARDS, AND OPERATING
PROCEDURES. THE COMMISSION SHALL NOTIFY SUCH NONCOMPLYING COMPACTING
STATE IN WRITING OF ITS NONCOMPLIANCE WITH COMMISSION BY-LAWS, RULES OR
OPERATING PROCEDURES. IF THE NONCOMPLYING COMPACTING STATE FAILS TO

S. 2895 11

REMEDY SUCH NONCOMPLIANCE WITHIN THE TIME SPECIFIED IN THE NOTICE OF
NONCOMPLIANCE, THE COMPACTING STATE SHALL BE DEEMED TO BE IN DEFAULT AS
SET FORTH IN SECTION EIGHT THOUSAND EIGHT HUNDRED FIFTEEN OF THIS ARTI-
CLE.
(D) THE COMMISSIONER OF ANY STATE IN WHICH AN INSURER IS AUTHORIZED TO
DO BUSINESS, OR IS CONDUCTING THE BUSINESS OF INSURANCE, SHALL CONTINUE
TO EXERCISE HIS OR HER AUTHORITY TO OVERSEE THE MARKET REGULATION OF THE
ACTIVITIES OF THE INSURER IN ACCORDANCE WITH THE PROVISIONS OF THE
STATE'S LAW. THE COMMISSIONER'S ENFORCEMENT OF COMPLIANCE WITH THE
COMPACT IS GOVERNED BY THE FOLLOWING PROVISIONS:
(1) WITH RESPECT TO THE COMMISSIONER'S MARKET REGULATION OF A PRODUCT
OR ADVERTISEMENT THAT IS APPROVED OR CERTIFIED TO THE COMMISSION, THE
CONTENT OF THE PRODUCT OR ADVERTISEMENT SHALL NOT CONSTITUTE A VIOLATION
OF THE PROVISIONS, STANDARDS OR REQUIREMENTS OF THE COMPACT EXCEPT UPON
A FINAL ORDER OF THE COMMISSION, ISSUED AT THE REQUEST OF A COMMISSIONER
AFTER PRIOR NOTICE TO THE INSURER AND AN OPPORTUNITY FOR HEARING BEFORE
THE COMMISSION.
(2) BEFORE A COMMISSIONER MAY BRING AN ACTION FOR VIOLATION OF ANY
PROVISION, STANDARD OR REQUIREMENT OF THE COMPACT RELATING TO THE
CONTENT OF AN ADVERTISEMENT NOT APPROVED OR CERTIFIED TO THE COMMISSION,
THE COMMISSION OR AN AUTHORIZED COMMISSION OFFICER OR EMPLOYEE, MUST
AUTHORIZE THE ACTION. HOWEVER, AUTHORIZATION PURSUANT TO THIS PARAGRAPH
DOES NOT REQUIRE NOTICE TO THE INSURER, OPPORTUNITY FOR HEARING OR
DISCLOSURE OF REQUESTS FOR AUTHORIZATION OR RECORDS OF THE COMMISSION'S
ACTION ON SUCH REQUESTS.
S 8810. DISPUTE RESOLUTION. THE COMMISSION SHALL ATTEMPT, UPON THE
REQUEST OF A MEMBER, TO RESOLVE ANY DISPUTES OR OTHER ISSUES THAT ARE
SUBJECT TO THIS COMPACT AND WHICH MAY ARISE BETWEEN TWO OR MORE COMPACT-
ING STATES, OR BETWEEN COMPACTING STATES AND NON-COMPACTING STATES, AND
THE COMMISSION SHALL PROMULGATE AN OPERATING PROCEDURE PROVIDING FOR
RESOLUTION OF SUCH DISPUTES.
S 8811. PRODUCT FILING AND APPROVAL. (A) INSURERS AND THIRD-PARTY
FILERS SEEKING TO HAVE A PRODUCT APPROVED BY THE COMMISSION SHALL FILE
SUCH PRODUCT WITH, AND PAY APPLICABLE FILING FEES TO, THE COMMISSION.
NOTHING IN THIS ARTICLE SHALL BE CONSTRUED TO RESTRICT OR OTHERWISE
PREVENT AN INSURER FROM FILING ITS PRODUCT WITH THE INSURANCE DEPARTMENT
IN ANY STATE WHEREIN SUCH INSURER IS LICENSED TO CONDUCT THE BUSINESS OF
INSURANCE, AND SUCH FILING SHALL BE SUBJECT TO THE LAWS OF THE STATES
WHERE FILED.
(B) THE COMMISSION SHALL ESTABLISH APPROPRIATE FILING AND REVIEW PROC-
ESSES AND PROCEDURES PURSUANT TO COMMISSION RULES AND OPERATING PROCE-
DURES. NOTWITHSTANDING ANY PROVISION IN THIS SECTION TO THE CONTRARY,
THE COMMISSION SHALL PROMULGATE RULES TO ESTABLISH CONDITIONS AND PROCE-
DURES UNDER WHICH THE COMMISSION WILL PROVIDE PUBLIC ACCESS TO PRODUCT
FILING INFORMATION. IN ESTABLISHING SUCH RULES, THE COMMISSION SHALL
CONSIDER THE INTERESTS OF THE PUBLIC IN HAVING ACCESS TO SUCH INFORMA-
TION, AS WELL AS PROTECTION OF PERSONAL MEDICAL AND FINANCIAL INFORMA-
TION AND TRADE SECRETS, THAT MAY BE CONTAINED IN A PRODUCT FILING OR
SUPPORTING INFORMATION.
(C) ANY PRODUCT APPROVED BY THE COMMISSION MAY BE SOLD OR OTHERWISE
ISSUED IN THOSE COMPACTING STATES IN WHICH THE INSURER IS LEGALLY
AUTHORIZED TO DO BUSINESS.
S 8812. REVIEW OF COMMISSION DECISIONS REGARDING FILINGS. (A) NOT
LATER THAN THIRTY DAYS AFTER THE COMMISSION HAS GIVEN NOTICE OF A DISAP-
PROVED PRODUCT OR ADVERTISEMENT FILED WITH THE COMMISSION, THE INSURER
OR THIRD PARTY FILER WHOSE FILING WAS DISAPPROVED MAY APPEAL THE DETER-

S. 2895 12

MINATION TO A REVIEW PANEL APPOINTED BY THE COMMISSION. THE COMMISSION
SHALL PROMULGATE RULES TO ESTABLISH PROCEDURES FOR APPOINTING SUCH
REVIEW PANEL AND PROVIDE FOR NOTICE AND HEARING. AN ALLEGATION THAT THE
COMMISSION, IN DISAPPROVING A PRODUCT OR ADVERTISEMENT FILED WITH THE
COMMISSION, ACTED ARBITRARILY, CAPRICIOUSLY OR IN A MANNER THAT IS AN
ABUSE OF DISCRETION OR OTHERWISE NOT IN ACCORDANCE WITH LAW, IS SUBJECT
TO JUDICIAL REVIEW IN ACCORDANCE WITH SUBSECTION (E) OF SECTION EIGHT
THOUSAND EIGHT HUNDRED FOUR OF THIS ARTICLE.
(B) THE COMMISSION SHALL HAVE AUTHORITY TO MONITOR, REVIEW AND RECON-
SIDER PRODUCTS AND ADVERTISEMENT SUBSEQUENT TO THEIR FILING OR APPROVAL
UPON A FINDING THAT THE PRODUCT DOES NOT MEET THE RELEVANT UNIFORM STAN-
DARD. WHERE APPROPRIATE, THE COMMISSION MAY WITHDRAW OR MODIFY ITS
APPROVAL AFTER PROPER NOTICE AND HEARING, SUBJECT TO THE APPEAL PROCESS
SET FORTH IN SUBSECTION (A) OF THIS SECTION.
S 8813. FINANCE. (A) THE COMMISSION SHALL PAY OR PROVIDE FOR THE
PAYMENT OF THE REASONABLE EXPENSES OF ITS ESTABLISHMENT AND ORGANIZA-
TION. TO FUND THE COST OF ITS INITIAL OPERATIONS, THE COMMISSION MAY
ACCEPT CONTRIBUTIONS AND OTHER FORMS OF FUNDING FROM THE NAIC, COMPACT-
ING STATES AND OTHER SOURCES. CONTRIBUTIONS AND OTHER FORMS OF FUNDING
FROM OTHER SOURCES SHALL BE OF SUCH A NATURE THAT THE INDEPENDENCE OF
THE COMMISSION CONCERNING THE PERFORMANCE OF ITS DUTIES SHALL NOT BE
COMPROMISED.
(B) THE COMMISSION SHALL COLLECT A FILING FEE FROM EACH INSURER AND
THIRD PARTY FILER FILING A PRODUCT WITH THE COMMISSION TO COVER THE COST
OF THE OPERATIONS AND ACTIVITIES OF THE COMMISSION AND ITS STAFF IN A
TOTAL AMOUNT SUFFICIENT TO COVER THE COMMISSION'S ANNUAL BUDGET.
(C) THE COMMISSION'S BUDGET FOR A FISCAL YEAR SHALL NOT BE APPROVED
UNTIL IT HAS BEEN SUBJECT TO NOTICE AND COMMENT AS SET FORTH IN SECTION
EIGHT THOUSAND EIGHT HUNDRED EIGHT OF THIS ARTICLE.
(D) THE COMMISSION SHALL BE EXEMPT FROM ALL TAXATION IN AND BY THE
COMPACTING STATES.
(E) THE COMMISSION SHALL NOT PLEDGE THE CREDIT OF ANY COMPACTING
STATE, EXCEPT BY AND WITH THE APPROPRIATE LEGAL AUTHORITY OF THAT
COMPACTING STATE.
(F) THE COMMISSION SHALL KEEP COMPLETE AND ACCURATE ACCOUNTS OF ALL
ITS INTERNAL RECEIPTS, INCLUDING GRANTS AND DONATIONS AND DISBURSEMENTS
OF ALL FUNDS UNDER ITS CONTROL. THE INTERNAL FINANCIAL ACCOUNTS OF THE
COMMISSION SHALL BE SUBJECT TO THE ACCOUNTING PROCEDURES ESTABLISHED
UNDER ITS BY-LAWS. THE FINANCIAL ACCOUNTS AND REPORTS INCLUDING THE
SYSTEM OF INTERNAL CONTROLS AND PROCEDURES OF THE COMMISSION SHALL BE
AUDITED ANNUALLY BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. UPON THE
DETERMINATION OF THE COMMISSION, BUT NO LESS FREQUENTLY THAN EVERY THREE
YEARS, THE REVIEW OF SUCH INDEPENDENT AUDITOR SHALL INCLUDE A MANAGEMENT
AND PERFORMANCE AUDIT OF THE COMMISSION. THE COMMISSION SHALL MAKE AN
ANNUAL REPORT TO THE GOVERNOR AND LEGISLATURE OF THE COMPACTING STATES,
WHICH SHALL INCLUDE A REPORT OF SUCH INDEPENDENT AUDIT. THE COMMISSION'S
INTERNAL ACCOUNTS SHALL NOT BE CONFIDENTIAL AND SUCH MATERIALS MAY BE
SHARED WITH THE COMMISSIONER OF ANY COMPACTING STATE UPON REQUEST,
PROVIDED, HOWEVER, THAT ANY WORK PAPERS RELATED TO ANY INTERNAL OR INDE-
PENDENT AUDIT AND ANY INFORMATION REGARDING THE PRIVACY OF INDIVIDUALS
AND INSURERS' PROPRIETARY INFORMATION, INCLUDING TRADE SECRETS, SHALL
REMAIN CONFIDENTIAL.
(G) NO COMPACTING STATE SHALL HAVE ANY CLAIM TO OR OWNERSHIP OF ANY
PROPERTY HELD BY OR VESTED IN THE COMMISSION OR TO ANY COMMISSION FUNDS
HELD PURSUANT TO THE PROVISIONS OF THIS COMPACT.

S. 2895 13

S 8814. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT. (A) ANY STATE
IS ELIGIBLE TO BECOME A COMPACTING STATE.
(B) THE COMPACT SHALL BECOME EFFECTIVE AND BINDING UPON LEGISLATIVE
ENACTMENT OF THE COMPACT INTO LAW BY TWO COMPACTING STATES; PROVIDED
HOWEVER, THAT THE COMMISSION SHALL BECOME EFFECTIVE FOR PURPOSES OF
ADOPTING UNIFORM STANDARDS FOR REVIEWING, AND GIVING APPROVAL OR DISAP-
PROVAL OF, PRODUCTS FILED WITH THE COMMISSION THAT SATISFY APPLICABLE
UNIFORM STANDARDS ONLY AFTER TWENTY-SIX STATES ARE COMPACTING STATES OR,
ALTERNATIVELY, BY STATES REPRESENTING GREATER THAN FORTY PERCENT OF THE
PREMIUM VOLUME FOR LIFE INSURANCE, ANNUITY, DISABILITY INCOME AND LONG-
TERM CARE INSURANCE PRODUCTS, BASED ON RECORDS OF THE NAIC FOR THE PRIOR
YEAR. THEREAFTER, IT SHALL BECOME EFFECTIVE AND BINDING AS TO ANY OTHER
COMPACTING STATE UPON ENACTMENT OF THE COMPACT INTO LAW BY THAT STATE.
(C) AMENDMENTS TO THE COMPACT MAY BE PROPOSED BY THE COMMISSION FOR
ENACTMENT BY THE COMPACTING STATES. NO AMENDMENT SHALL BECOME EFFECTIVE
AND BINDING UPON THE COMMISSION AND THE COMPACTING STATES UNLESS AND
UNTIL ALL COMPACTING STATES ENACT THE AMENDMENT INTO LAW.
S 8815. WITHDRAWAL, DEFAULT AND TERMINATION. (A)(1) ONCE EFFECTIVE,
THE COMPACT SHALL CONTINUE IN FORCE AND REMAIN BINDING UPON EACH AND
EVERY COMPACTING STATE; PROVIDED THAT A COMPACTING STATE MAY WITHDRAW
FROM THE COMPACT ("WITHDRAWING STATE") BY ENACTING A STATUTE SPECIF-
ICALLY REPEALING THE STATUTE WHICH ENACTED THE COMPACT INTO LAW.
(2) THE EFFECTIVE DATE OF WITHDRAWAL IS THE EFFECTIVE DATE OF THE
REPEALING STATUTE. HOWEVER, THE WITHDRAWAL SHALL NOT APPLY TO ANY PROD-
UCT FILINGS APPROVED OR SELF-CERTIFIED, OR ANY ADVERTISEMENT OF SUCH
PRODUCTS, ON THE DATE THE REPEALING STATUTE BECOMES EFFECTIVE, EXCEPT BY
MUTUAL AGREEMENT OF THE COMMISSION AND THE WITHDRAWING STATE UNLESS THE
APPROVAL IS RESCINDED BY THE WITHDRAWING STATE AS PROVIDED IN PARAGRAPH
FIVE OF THIS SUBSECTION.
(3) THE COMMISSIONER OF THE WITHDRAWING STATE SHALL IMMEDIATELY NOTIFY
THE MANAGEMENT COMMITTEE IN WRITING UPON THE INTRODUCTION OF LEGISLATION
REPEALING THIS COMPACT IN THE WITHDRAWING STATE.
(4) THE COMMISSION SHALL NOTIFY THE OTHER COMPACTING STATES OF THE
INTRODUCTION OF SUCH LEGISLATION WITHIN TEN DAYS AFTER ITS RECEIPT OF
NOTICE THEREOF.
(5) THE WITHDRAWING STATE IS RESPONSIBLE FOR ALL OBLIGATIONS, DUTIES
AND LIABILITIES INCURRED THROUGH THE EFFECTIVE DATE OF WITHDRAWAL,
INCLUDING ANY OBLIGATIONS, THE PERFORMANCE OF WHICH EXTEND BEYOND THE
EFFECTIVE DATE OF WITHDRAWAL, EXCEPT TO THE EXTENT THOSE OBLIGATIONS MAY
HAVE BEEN RELEASED OR RELINQUISHED BY MUTUAL AGREEMENT OF THE COMMISSION
AND THE WITHDRAWING STATE. THE COMMISSION'S APPROVAL OF PRODUCTS AND
ADVERTISEMENT PRIOR TO THE EFFECTIVE DATE OF WITHDRAWAL SHALL CONTINUE
TO BE EFFECTIVE AND BE GIVEN FULL FORCE AND EFFECT IN THE WITHDRAWING
STATE, UNLESS FORMALLY RESCINDED BY THE WITHDRAWING STATE IN THE SAME
MANNER AS PROVIDED BY THE LAWS OF THE WITHDRAWING STATE FOR THE PROSPEC-
TIVE DISAPPROVAL OF PRODUCTS OR ADVERTISEMENT PREVIOUSLY APPROVED UNDER
STATE LAW.
(6) REINSTATEMENT FOLLOWING WITHDRAWAL OF ANY COMPACTING STATE SHALL
OCCUR UPON THE EFFECTIVE DATE OF THE WITHDRAWING STATE'S LEGISLATION
REENACTING THE COMPACT.
(B) (1) IF THE COMMISSION DETERMINES THAT ANY COMPACTING STATE HAS AT
ANY TIME DEFAULTED ("DEFAULTING STATE") IN THE PERFORMANCE OF ANY OF ITS
OBLIGATIONS OR RESPONSIBILITIES UNDER THIS COMPACT, THE BY-LAWS OR DULY
PROMULGATED RULES OR OPERATING PROCEDURES, THEN, AFTER NOTICE AND HEAR-
ING AS SET FORTH IN THE BY-LAWS, ALL RIGHTS, PRIVILEGES AND BENEFITS
CONFERRED BY THE COMPACT ON THE DEFAULTING STATE SHALL BE SUSPENDED FROM

S. 2895 14

THE EFFECTIVE DATE OF DEFAULT AS FIXED BY THE COMMISSION. THE GROUNDS
FOR DEFAULT INCLUDE, BUT ARE NOT LIMITED TO, FAILURE OF A COMPACTING
STATE TO PERFORM ITS OBLIGATIONS OR RESPONSIBILITIES, AND ANY OTHER
GROUNDS DESIGNATED IN COMMISSION RULES. THE COMMISSION SHALL IMMEDIATELY
NOTIFY THE DEFAULTING STATE IN WRITING OF THE DEFAULTING STATE'S SUSPEN-
SION PENDING A CURE OF THE DEFAULT. THE COMMISSION SHALL STIPULATE THE
CONDITIONS AND THE TIME PERIOD WITHIN WHICH THE DEFAULTING STATE MUST
CURE ITS DEFAULT. IF THE DEFAULTING STATE FAILS TO CURE THE DEFAULT
WITHIN THE TIME PERIOD SPECIFIED BY THE COMMISSION, THE DEFAULTING STATE
SHALL BE TERMINATED FROM THE COMPACT AND ALL RIGHTS, PRIVILEGES AND
BENEFITS CONFERRED BY THE COMPACT SHALL BE TERMINATED FROM THE EFFECTIVE
DATE OF TERMINATION.
(2) PRODUCT APPROVALS BY THE COMMISSION OR PRODUCT SELF-CERTIFICA-
TIONS, OR ANY ADVERTISEMENT IN CONNECTION WITH SUCH PRODUCT, THAT ARE IN
FORCE ON THE EFFECTIVE DATE OF TERMINATION SHALL REMAIN IN FORCE IN THE
DEFAULTING STATE IN THE SAME MANNER AS IF THE DEFAULTING STATE HAD WITH-
DRAWN VOLUNTARILY UNDER THIS SECTION.
(3) REINSTATEMENT FOLLOWING TERMINATION OF ANY COMPACTING STATE
REQUIRES A REENACTMENT OF THE COMPACT BY THAT STATE.
(C)(1) THE COMPACT DISSOLVES EFFECTIVE UPON THE DATE OF THE WITHDRAWAL
OR DEFAULT OF THE COMPACTING STATE WHICH REDUCES MEMBERSHIP IN THE
COMPACT TO ONE COMPACTING STATE.
(2) UPON THE DISSOLUTION OF THE COMPACT, THE COMPACT BECOMES NULL AND
VOID AND SHALL BE OF NO FURTHER FORCE OR EFFECT, AND THE BUSINESS AND
AFFAIRS OF THE COMMISSION SHALL BE WOUND UP AND ANY SURPLUS FUNDS SHALL
BE DISTRIBUTED IN ACCORDANCE WITH THE BY-LAWS.
S 8816. SEVERABILITY AND CONSTRUCTION. (A) THE PROVISIONS OF THE
COMPACT SHALL BE SEVERABLE; AND IF ANY PHRASE, CLAUSE, SENTENCE OR
PROVISION IS DEEMED UNENFORCEABLE, THE REMAINING PROVISIONS OF THE
COMPACT SHALL BE ENFORCEABLE.
(B) THE PROVISIONS OF THE COMPACT SHALL BE LIBERALLY CONSTRUED TO
EFFECTUATE ITS PURPOSES.
S 8817. BINDING EFFECT OF COMPACT AND OTHER LAWS. (A) NOTHING IN THIS
SECTION PREVENTS THE ENFORCEMENT OF ANY OTHER LAW OF A COMPACTING STATE,
EXCEPT AS PROVIDED IN SUBSECTION (B) OF THIS SECTION.
(B) FOR ANY PRODUCT APPROVED OR CERTIFIED TO THE COMMISSION, THE
RULES, UNIFORM STANDARDS AND ANY OTHER REQUIREMENTS OF THE COMMISSION
SHALL CONSTITUTE THE EXCLUSIVE PROVISIONS APPLICABLE TO THE CONTENT,
APPROVAL AND CERTIFICATION OF SUCH PRODUCTS. FOR ADVERTISEMENT THAT IS
SUBJECT TO THE COMMISSION'S AUTHORITY, ANY RULE, UNIFORM STANDARD OR
OTHER REQUIREMENT OF THE COMMISSION WHICH GOVERNS THE CONTENT OF THE
ADVERTISEMENT SHALL CONSTITUTE THE EXCLUSIVE PROVISION THAT A COMMIS-
SIONER MAY APPLY TO THE CONTENT OF THE ADVERTISEMENT. NOTWITHSTANDING
THE FOREGOING, NO ACTION TAKEN BY THE COMMISSION SHALL ABROGATE OR
RESTRICT:
(1) THE ACCESS OF ANY PERSON TO STATE COURTS;
(2) REMEDIES AVAILABLE UNDER STATE LAW RELATED TO BREACH OF CONTRACT,
TORT OR OTHER LAWS NOT SPECIFICALLY DIRECTED TO THE CONTENT OF THE PROD-
UCT;
(3) STATE LAW RELATING TO THE CONSTRUCTION OF INSURANCE CONTRACTS; OR
(4) THE AUTHORITY OF THE ATTORNEY GENERAL OF THE STATE INCLUDING, BUT
NOT LIMITED TO, MAINTAINING ANY ACTIONS OR PROCEEDINGS AS AUTHORIZED BY
LAW.
(C) ALL INSURANCE PRODUCTS FILED WITH INDIVIDUAL STATES SHALL BE
SUBJECT TO THE LAWS OF THOSE STATES.

S. 2895 15

(D) ALL LAWFUL ACTIONS OF THE COMMISSION, INCLUDING ALL RULES AND
OPERATING PROCEDURES PROMULGATED BY THE COMMISSION, ARE BINDING UPON THE
COMPACTING STATES.
(E) ALL AGREEMENTS BETWEEN THE COMMISSION AND THE COMPACTING STATES
ARE BINDING IN ACCORDANCE WITH THEIR TERMS.
(F) UPON THE REQUEST OF A PARTY TO A CONFLICT OVER THE MEANING OR
INTERPRETATION OF COMMISSION ACTIONS, AND UPON A MAJORITY VOTE OF THE
COMPACTING STATES, THE COMMISSION MAY ISSUE ADVISORY OPINIONS REGARDING
THE DISPUTED MEANING OR INTERPRETATION.
(G) IN THE EVENT ANY PROVISION OF THIS ARTICLE EXCEEDS THE CONSTITU-
TIONAL LIMITS IMPOSED ON THE LEGISLATURE OF ANY COMPACTING STATE, THE
OBLIGATIONS, DUTIES, POWERS OR JURISDICTION SOUGHT TO BE CONFERRED BY
THAT PROVISION UPON THE COMMISSION SHALL BE INEFFECTIVE AS TO SUCH
COMPACTING STATE, AND SUCH OBLIGATIONS, DUTIES, POWERS OR JURISDICTION
SHALL REMAIN IN THE COMPACTING STATE AND SHALL BE EXERCISED BY THE AGEN-
CY THEREOF TO WHICH SUCH OBLIGATIONS, DUTIES, POWERS OR JURISDICTION ARE
DELEGATED BY LAW IN EFFECT AT THE TIME THE COMPACT BECOMES EFFECTIVE.
S 3. This act shall take effect January 1, 2014 and shall expire and
be deemed repealed December 31, 2016; provided, however, that any policy
or contract issued during the period that the provisions of this act are
in effect that has been approved in accordance with the provisions of
this act shall continue in full force and effect.

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